INVESTING

INVESTING; New Mutual Series Lineup Imparting Less Mutuality

By CAROLE GOULD

Published: October 18, 1998

THE roster of value players at Franklin Mutual Advisers will remain the same after the chief executive officer, Michael F. Price, gives up his management duties next month, but they will be getting new positions. Specifically, the senior analysts who have long executed the Mutual Series team-based investing have been named as managers and co-managers of the individual funds.

The new lineup at the $26 billion fund group is as follows. Ray Garea, a senior analyst, will run Mutual Qualified, helped by the assistant manager, Jeff Diamond. Larry Sondike, also a senior analyst, will be co-manager for Mutual Beacon and Mutual Shares, the first with David Winters, and the latter with David Marcus, both senior analysts.

Mutual Discovery, which invests in smaller companies globally, will have as co-managers Robert L. Friedman and Mr. Marcus, who will also take sole stewardship of Mutual European. Finally, Mr. Garea will also manage Mutual Financial with an assistant manager, Jim Agah. All the managers will be supervised by Mr. Friedman, who becomes chief investment officer in November.

What does this mean for investors? The three biggest and oldest funds, Beacon, Shares and Qualified -- which have long been managed as virtual clones, with the analysts spreading their ideas among them -- are likely to develop differences, say outside analysts.

The new approach answers the funds' need for micromanagement, according to Peter A. Langerman, who becomes the chief executive in November. (Mr. Price sold his fund company to Franklin Resources two years ago and in July announced his plans to relinquish management duties.) ''When you have hundreds of stocks in a fund, they have to be watched as closely as the bigger positions,'' Mr. Langerman said. The three funds hold roughly 300 stocks each. ''This is an attempt to have portfolio managers focus on a particular fund, as opposed to running money as a large pool,'' he said.

As of June 30, the three funds shared 7 of their 10 largest stock holdings. They are Chase Manhattan, Investor A.B., Media One, General Motors, Railtrack, Suez Lyonnaise des Eaux and Morgan Stanley Dean Witter. The funds have lagged behind their peers this year, largely because of their investment in Sunbeam.

The fund company says such cross-fertilization will not change. ''We still expect the largest positions to be reflected across the board in all the funds,'' Mr. Langerman said. ''A good value idea is a good value idea, and everyone wants to participate.''

But the new structure may address a common criticism of the funds, said Susan Belden, editor of No-Load Fund Analyst, an investing newsletter. ''Now they can say they've split up the large pool of money, and it's being managed by different people,'' she said.

How can investors distinguish among the three domestic large-cap offerings? Mr. Langerman and Mr. Friedman offered these guidelines: Qualified holds a bigger range of large- and mid-cap stocks; Beacon has the biggest chunk of foreign issues, at 35 percent, plus large-cap stocks, and Shares holds the smallest portion of foreign issues, 15 percent, and focuses on large-cap, not mid-cap, stocks.

Chart: ''Who's Who at Franklin Mutual'' Next month, each Mutual Series fund, most of which have been team managed, will get its own manager. The chart shows which manager will take over which fund. (Sources: Franklin Mutual Series; Morningstar Inc.)